It is impossible to make a wired headset work with the XFPS. I have tried several ways and alternatives, even have a 2nd controller logged as another account to talk with my friends (works, but not the best, especially when playing Halo...), and it turns out that the wireless headset is the best possible solution.
Not the most comfortable thingy, my ear would start to hurt after 10-15 mins of wearing it due to the f***ing awkward ear loop shape (I made some kind of headband out from cheap airplane headphones I had, and now it holds comfortably the headset on my ear).
The other disadvantage is that the battery only lasts about 12h and it takes a whopping 6h to recharge, even for it's small size (c'mon Microsoft, Duracell has 15 mins recharge time AA batteries...)
Add a 10ft maximum wireless range + a so-so audio signal and you have a truly genuine Microsoft product. Pure scrap, thought it's kinda the only alternative, so heh I live with it
Also, in theory, the microphone from a Guitar Hero Band Kit could maybe work, since it's plugged directly in the console with a USB cable, but I can't confirm anything. Worth a try for anyone owning the Band Kit. Still, using a singer microphone while playing with a mouse and keyboard ain't very practical...
Everything is up to you I guess. With a bit of chance, you can find a brand new wireless headset on eBay for about $30-35 including shipping. Try not to get fooled by those $10 "UNTESTED, PROVIDED AS-IS" offers, I wouldn't trust them, and with a brand new it guarantees that the "usually yellowish and smelly when from second hand" foam thingy is not contaminated by some STD
Hope this clears up a few things for you.